We are indeed in the middle of difficulty. As our community prepares for
the holiday season, we continue to be affected by a severe breakdown in
our economy.

Our nation’s economic crisis was rooted in predatory lending practices
and risky sub-prime loans that began more than 10 years ago. In the fall
of 2008, when our national housing bubble burst, many of our country’s
major financial institutions, including Lehman Brothers, Merrill Lynch,
AIG, Fannie Mae and Freddie Mac, failed.

We have felt the repercussions here in Fairfax County.

******

Our major source of revenue – making up over 60% of our budget – is from
residential and commercial real estate taxes. In the current fiscal year,
the value of property in Fairfax County declined by 10%. That’s a loss of
$244 million.

Had the Board attempted to maintain services, programs and staffing
levels at the previous year’s level and provided performance-based salary
for our employees, we would have come up $640 million – or nearly 20
percent -- short in our $3.3 billion General Fund Budget.

We presented information regarding our budget and discussed with you
ideas for addressing our fiscal challenges. Together, we examined our
priorities and discussed possible service reductions or organizational
changes.

Thanks in large part to this inclusive process, and aided by Stimulus funding that provided a bridge
for our public schools, our Board was able to unanimously adopt a
budget last April that struck a responsible balance. We were able to
keep average tax bills steady. We also made a number of cuts and
reductions:

We closed the Western Fairfax Outpatient clinic and outsourced some
business and personal property tax collections for additional savings.

We cut back on printed materials, including the County newsletter and
closed 2 Computer Learning Centers for more than a half million dollar
savings.

Schools increased the number of students per classroom

And reduced the summer school program.

We also found new ways to deliver services in a less costly
manner:

1,300 county employees now work from home telecommuting, saving us
money on office expenses, reducing congestion and cutting carbon
emission.

The schools made significant changes to school bus routes and school
hours, saving over $4 million.

Our energy program is saving us millions of dollars in energy costs and
operating expenses.

We consolidated Warehouse Functions between the County and the Schools,
and

Implemented a shared approach between the County and the Schools to
save $400,000 on legal resources.

As we look ahead and prepare for next year’s budget we continue to be
seriously challenged.

Property taxes continue to fall (this time by $232.5 million). Costs for
debt service, utilities and retirement are increasing. These two factors
combined create a projected shortfall for Fiscal Year 2011 of $316
million dollars. Schools – which make up 53.8% of the County’s
Budget -- project a shortfall of $176 million.

Once again, beginning in September, we have worked together through the
Community Dialogue process to prepare for next year. You can find more
information about the Dialogues, and see suggestions
and comments online.

*******

At the same time that our County has experienced the most severe
financial decline in most of our lifetimes, we are challenged by an
increase in the needs of many in our community.

County residents are still losing
their homes to foreclosure. In September of 2008, foreclosures in
Fairfax County peaked at more than 2,200. Last July was the first time in
16 months that we had less than 1,000 foreclosed homes on the market. A
hopeful sign, home sales are up 5%. As the inventory of foreclosed homes
diminishes, home prices are likely to stabilize and, hopefully, even
increase.

Fairfax County offers help to citizens facing the loss of their homes.

The Fairfax Housing Agency has helped more than 700 families by providing counseling and help to
either stay in their homes or become home owners.

We also provide grant money to non-profit organizations to help them
buy foreclosed properties and convert them into affordable rental
properties. This provides low-cost housing for people in need.

In its first eight days of operation, our new Housing Opportunities
Support Teams (HOST) prevented 18
households from becoming homeless. This program, operated as a
partnership of local faith-based and nonprofit organizations, is
coordinated by the new Fairfax County Office to Prevent and End
Homelessness.

Loss of a home is often directly related to loss of employment.
Unemployment nationwide remains high at 9.7%. We are faring better in
Fairfax County. Still our 4.7
percent unemployment rate is up 1.5 percent from last year. Prior to
this downturn, unemployment in Fairfax had never been above 4%.

If you are affected by this rise in unemployment, you can find
assistance by contacting our Department of Family Services, Skill Source Centers at
703-704-6286.

This economy has caused a dramatic increase in demand for our county’s
human services. Our Department of Coordinated Services Planning was
established in the mid 90’s to handle urgent human services-related
situations.

In all of 2007, that office had only 5 days with more than 400 calls.
During 2008, it received that many calls one out of every four
days. In 2009, it received that many calls every other day.

The demand for such services is widespread. Chances are that someone on
your block or in your neighborhood needs help.

For assistance from the Coordinated Services
Planning office, call 703-222-0880, TTY 711. The office is open
Monday through Friday from 8 a.m. to 4:30 p.m. Or you can contact Crisis
Line at 211.

*************

While many economists believe the market is bottoming out, the path to
economic recovery is steep and winding.

Despite the current economic conditions and the challenges our county
faces, my colleagues and I are looking using this downturn to identify
opportunities – or, using the popular current phrase, we are “not
letting a crisis go to waste.”

“By engaging our residents and businesses in the process of
addressing these challenging times, protecting investment in our
most critical priorities, and by maintaining strong responsible
fiscal stewardship, we must ensure” these goals:

No. 1 -- A Quality Educational System Education is Fairfax County’s highest priority. We will continue
the investment needed to protect and enhance this primary community
asset.

No. 2 -- Safe Streets and Neighborhoods Fairfax County is the safest community of our size in the U.S. We
will continue to invest in public safety to respond to emergency
situations and to prevent and intervene in destructive behaviors, such
as gang activity and substance abuse.

No. 3 -- A Clean, Sustainable Environment Fairfax County will continue to protect our drinking water, air
quality, stream valleys and tree canopy through responsible
environmental regulations and practices. We will continue to take a
lead in initiatives to address energy efficiency and sustainability and
to preserve and protect open space for our residents to enjoy.

No. 4 -- Livable, Caring and Affordable Communities As Fairfax County continues to grow we will do so in ways that
address environmental and mobility challenges. We will encourage
housing that is affordable to our children, seniors and members of our
workforce. We will provide compassionate and efficient services to
members of our community who are in need.

No. 5 -- A Vibrant Economy Fairfax County has a well-earned reputation as a business-friendly
community. We will vigorously pursue economic development and
revitalization opportunities. We will support the business
community and encourage this healthy partnership. We will continue to
be sensitive and responsive to the needs of our corporate neighbors in
the areas of workforce development and availability,
affordable housing, regulation and taxation.

No. 6 -- Efficient Transportation Network Fairfax County makes it a priority to connect People and Places.
We will continue to plan for and invest in transportation improvements
to include comprehensive bicycle and pedestrian initiatives, bus and
para transit, road and intersection improvements and expansion of
Metrorail and VRE.

No. 7 -- Recreational and Cultural Opportunities A desirable community is one where there is a lot going on that
residents can enjoy. Fairfax County will continue to provide for
athletic, artistic, intellectual and recreational activities, in our
communities, parks, libraries and schools.

No. 8 -- Taxes that are Affordable The property tax is Fairfax County’s primary source of revenue to
provide services. We will ensure that taxes are affordable for our
residents and businesses, and we will seek ways to diversify County
revenues in order to make our tax base more equitable. We will ensure
that County programs and services are efficient, effective, cost
effective and well run.

****

Meeting these goals in these challenging times will not be easy, but I
remain optimistic. By working together, we have been able to adjust to
these changing economic times, while protecting the quality of life we
value.

*******

Ask county residents what bothers them the most, the answer is most
often traffic congestion. Essentially all roads in Fairfax County
are owned and maintained (or not!) by the Commonwealth of Virginia. At our
retreat, my colleagues and I agreed to examine and pursue options for
improving our share of transportation funding, as well as possibly
seeking more authority over maintenance and operation of the State roads
and intersections in Fairfax.

A number of major transportation projects are underway (or are being
planned in our County - which I would like to share with you:

Rail to
Dulles Airportis closer to reality than ever before.
Major transportation projects are difficult undertakings and require
years of effort. In concept, this project began 4 decades ago when
Dulles Airport was built. Finally, after many years of hard work and
planning, the Metro “Silver Line” will be a reality in just a few short
years.

On March 10th I participated in the signing of a Full Funding
Agreement for the Federal share of this project. The Board has approved
the Phase II special tax district for commercial land owners in the
Reston/Herndon area where three Metrorail stations will be built.

Four stations, now under construction, will serve the Tysons Corner
area. By 2013 we will have service to Whiele Ave. in Reston. By 2016 we
will have service all the way to the airport!

Construction has begun on the Capital Beltway HOT
Lanes. This is a public-private partnership that will construct
High Occupancy Toll lanes for a 14-mile stretch of I-495. We expect to
complete it in 2013. At the insistence of our Board, sound walls will
be built along its entire length as well as reforestation and
landscaping. As Chairman, one of my top priorities is to include
Express Bus or Bus Rapid Transit on the HOT Lanes.

Congestion will lessen on I-95 as we add a fourth lane in each
direction on I-95 between the Fairfax County Parkway and Route 123.
This will be done by the end of this year.

The Telegraph Road Interchange is being re-built. This final
major project of the Woodrow Wilson Bridge replacement will improve
traffic flow and provide pedestrian access.

The final two miles of the Fairfax County Parkway, which runs
through the Engineering Proving Ground, is under construction. Thanks
to federal stimulus dollars, we expect to complete Phase 1 and 2 of
this project by the end of 2010.

We are working with our federal partners to identify other sources of
revenue for the hundreds of millions of dollars in additional
improvements that will be essential to support the relocation of
military facilities to this part of the county.

Meanwhile, a number of major redevelopment and revitalization projects
are transforming our community in a positive way.

With
construction of the Metro Silver Line, we are well underway on plans to
redevelop Tysons Corner into a
planned, transit-oriented, green, walkable, multi-use urban community.
The Planning Commission is currently reviewing Comprehensive Plan
language that will guide the redevelopment.

The “Tysons Vision” calls for creating 8 distinct districts oriented
to 4 rail stations and laced with 160 acres of parks and open
space.

The county’s proposed plan calls for:

affordable housing,

green buildings,

energy efficiency

a blueprint for storm water management,

an urban grid of streets,

a thriving transit system,

and reduced congestion.

Public hearings on the new plan are expected to be held before the
Planning Commission in March, with Board of Supervisors hearings in May.

In July, the Board approved the rezoning necessary to allow
Springfield Mall to be revitalized into a pedestrian-oriented
town center of mixed retail, office, hotel and residential uses. The
project calls for a grocery store, dog park, tot lot, athletic courts,
fitness center, and state of the art movie center. The application we
approved seized an opportunity to enhance the image of Springfield, and
transform the mall into a thriving amenity for the community once
again.

Other Redevelopment and Revitalization projects in the County include:

The Re-use of the former Lorton Prison into the Lorton Arts Center and
the Laurel Hill mixed use community – an
exciting new component of our South County area of Fairfax, and

Plan amendments for commercial revitalization in the Richmond
Highway corridor. This will allow for revitalizing the area in
concert with the Defense Department Base Realignment
and Closure (BRAC) process and the relocation of more than 19,000
military jobs to Fort Belvoir and the Engineering Proving Ground in
southern Fairfax County. When the relocations are fully realized in
2011, we’ll double the workforce currently stationed at Fort Belvoir.
This move will have a transformative effect on nearby communities like
Lorton, Mount Vernon, Kingstowne and Burke. It will also be a
tremendous catalyst for revitalization in central Springfield and the
Richmond Highway corridor.

*******

On October
19th, our Board adopted a Fairfax County Energy
Policy, consistent with our Cool Counties Climate Stabilization
Initiative. We are also looking at ways to remove barriers to residents
wanting to generate their own electricity with solar panels.

On November 18th, I hosted a Town Meeting that described this policy and
gave specific examples of what we are doing in Fairfax County.

For instance:

We’ve adopted a Sustainable Development Policy for Capital Projects
greater than 10,000 square feet, with a goal of achieving LEED Silver
certification.

Facilities Management started an energy efficiency program which not
only reduced the amount of energy consumed by county operations but has
saved millions of dollars in operating expenses.

The Park Authority has initiated an energy management effort which will
pay for itself when completed later this year. We’ll reduce park
operating costs and energy consumption by 16%.

This year wind power provided 10% of the county’s energy needs. That
will enable us to reduce CO2 emissions by over 23,000 metric tons over
three years.

We now have 104 hybrid vehicles in the county’s vehicle fleet. One was
converted to a plug-in hybrid that can achieve over 100 miles per
gallon on some trips. We are seeking grants for a plug-in hybrid school
bus.

When I was sworn in as your Chairman 10 months ago, I acknowledged that
we were in the middle of difficult times. I said that it was important
that we remain hopeful and we have. Our Fairfax County community has
rolled up our collective sleeves and worked together to navigate these
choppy waters.

As we near the end of 2009, we can look back on some very positive
accomplishments.

We continue to be the safest jurisdiction of our size in the United
States. This past year, crime
statistics fell.

We still are among the most sought after address for the nation’s
businesses. This year, Hilton Worldwide and SAIC chose to locate their
headquarters here in Fairfax County.

And we have become the new home of the IGNITE Institute, a new
biotechnology company for personalized medicine. The addition of this
new primary industry sector to Fairfax County's economy will bring
significant improvements in medical treatment and will be a major
catalyst in the evolution of health care. Thanks to pioneering research
at the Ignite Institute, Fairfax County will be tied to major
developments in this field and will become major players in the field
of bio-technology.

While there are many difficult challenges that lay ahead, I am committed
to turning those difficulties into opportunities - to move Fairfax
County forward, and to meet the needs of our community.

I know I can speak for all of my Colleagues on the Board when I say that
we will work – with you - every day to keep Fairfax County the place
where we want to live, work, play, raise our families and grow older
comfortably. As we weather this economic storm, we will focus on the
opportunity for engagement, change and growth that lies ahead.

As the generations who have passed before us we are committed to making
every difficulty into an opportunity, every struggle a chance to leave
our community just a little bit better than we found it.